Geely Holding Group Co, China's largest privately owned auto maker, plans to build a factory in Mexico to make models for sale in the United States as its new approach to tackle the world's biggest automobile market.

The company is working with partners to set up a manufacturing base with an initial investment of US$500 million, founder Li Shufu said in an interview with Bloomberg News yesterday at the North American International Auto Show in Detroit.

He declined to provide a timetable or name the partners.

Geely, China FAW Group Corp and other auto makers are setting up factories overseas to speed up exports to other markets as competition at home reduces profit margins.

Geely aims to boost its total exports to 1.3 million vehicles by 2015 from about 30,000 last year.

"We have to design cars fully in compliance with the demands of American consumers instead of what we planned earlier, to export existing models," said Li, who is chairman of Geely Holding.

"We also must make sure there will be certain volumes of sales. Otherwise, we can't make a profit." Geely, which in 2006 was the first Chinese auto maker to display vehicles at the Detroit show, originally planned to sell its Free Cruiser in the US starting this year. The company now operates factories in Russia, Ukraine and Indonesia, assembling vehicles from component kits. Combined capacity is 50,000 units.

The Mexico factory will be Geely's most expensive overseas facility and its first assembly plant outside of China with full manufacturing capabilities, said George Zhao, a company vice president.

(Shanghai Daily January 15, 2008)